What is EBITDA? EBITDA is defined by Wikipedia as: A company’s Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is an accounting measure calculated using a company’s net earnings, before interest expenses, taxes, depreciation and amortization are subtracted, as a measurement of a company’s current operating profitability.
Why should a CIO be concerned about EBITDA? EBITDA is widely used in many areas of finance when evaluating the performance and valuation of a company. In many cases, EBITDA is also a key metric utilized to determine an executive team’s incentive bonus, including the CIO. Now do I have your attention?